Soccer-Brazil World Cup stadiums on track, but costs soar

SAO PAULO, April 3 The good news is that despite
late starts and strikes, work on the 12 stadiums being built or
renovated for the 2014 World Cup is largely on schedule.

The bad news is that they are already three times over
budget and are being built with taxpayers' money despite initial
promises that private enterprise would foot the bill.

Although all the stadiums should be ready for the kick-off
in 26 months' time, with sports minister Aldo Rebelo saying that
some will be ready by the end of this year, there will be a
heavy price for Brazil's beleaguered taxpayers to pay.

The stadiums are much more expensive than similar arenas
built elsewhere and at least four of them, and perhaps as many
as eight, will be white elephants, unlikely ever to turn a
profit.

"I don't understand why a stadium in Brazil needs to cost
500 million reais ($275 million) when there are examples of
stadiums built elsewhere in the world with 40,000 or 50,000
seats that cost less than half that," said Amir Somoggi, Sports
Management Consulting Director at BDO Brazil, an auditing firm.

The ballooning price tag of the World Cup preparations is
yet another example of the "Brazil cost", an exasperating mix of
high taxes, stifling bureaucracy and crumbling infrastructure
that make Brazil a notoriously expensive and difficult place to
do business.

Those elements are perhaps most evident at Itaquera in Sao
Paulo, where Brazilian construction giant Odebrecht is building
a brand new arena to host the prestigious opening match.

The stadium, which will belong to Sao Paulo's biggest club
Corinthians once the tournament is over, will seat 48,000 fans
and cost at least 820 million reais ($450.5 million).

But that doesn't include the construction and removal of the
20,000 additional seats that FIFA, soccer's governing body,
requires for the opening game.

Odebrecht and Corinthians officials still do not know how
much the temporary seating will cost.

"Our contract is to build a 48,000-seat stadium and prepare
the ground for the additional seating," said Frederico Barbosa,
the engineer in charge of the project. "The cost of that is
still being discussed."

There are other issues surrounding Itaquera, as with most
World Cup grounds. It is far from the city centre and the road
links and surrounding infrastructure are poor.

The design also has its detractors. Although it is one of
the most expensive of the 12 venues, areas behind the goals are
uncovered, a problem in a country with torrential rains and
blistering heat.

And it is one of only two not to seek certification by the
Green Building Council, according to GBC officials in Brazil.

But it does have nearby rail and metro links, unlike many of
the other stadiums for the Cup, and construction is on time.

"We've been surprised how well things have gone, to get this
far after just nine months is great," said Barbosa.

CORINTHIANS VS SAO PAULO

The opening match was supposed to take place at Morumbi, the
73,000-seat stadium owned by Sao Paulo FC, arch-rivals of
Corinthians.

Sao Paulo drew up plans to modernize the ground but FIFA and
local organizers rejected them. Instead, FIFA and the Brazilian
Football Confederation urged Corinthians to build a brand new
facility.

Corinthians, however, said it did not need 65,000 seats.
After much discussion, the club agreed to build a 48,000-seat
arena and add temporary seating for the opening match.

The cost was set at 350 million reais ($192 million) but
could reach three times that once the temporary grandstands are
factored in.

Half the money will come in from the BNDES, Brazil's state
development bank, at subsidized interest rates. The rest will
come from private investors who are allowed to write off the
cost in tax breaks. That financing model is common to the nine
grounds that are publicly owned.

"I can't believe that the Corinthians stadium will be more
modern or more efficient than the Allianz Arena, a ground that
was the most expensive in the Germany World Cup and an obra
prima in sports architecture," said Somoggi, referring to the
Munich stadium.

SOARING COSTS

Overall, the estimated cost of stadiums has more than
tripled since Brazil were awarded the tournament in 2007.

The current official estimate of 6.7 billion reais ($3.68
billion) is well above the 1.4 billion euros ($1.87 billion)
Germany spent on its 12 stadiums for the 2006 World Cup and more
than twice the $1.48 billion South Africa spent on 10 arenas
just two years ago.

The modernisation of the legendary Maracanã stadium in Rio
de Janeiro, where the World Cup Final will be held, will exceed
1 billion reais ($550 million) when added to other reforms
carried out over the last few years.

This overhaul is the third in just over a decade and costs
soared after engineers mistakenly decided the stadium would not
need a new roof.

In Cuiaba, a city with little footballing tradition,
authorities are spending 520 million reais ($285.7 million) on a
stadium for just four group games.

The Amazonian city of Manaus is shelling out more than 533
million reais ($293 million) on a new arena even though its best
club is in the fourth division of the Brazilian championship.

"If it was just based on football criteria then the games
wouldn't even be on TV here as our standards of professional
football leave a lot to be desired," said Carlos Cavalcanti, the
organizer of a state football tournament in Manaus.

"The fact that people want to visit Amazonia is the main
factor."

Critics say the government, under pressure to accelerate
public works project for the Cup, is inadvertently catering to
big business at the expense of the Brazilian taxpayer.
Authorities are already handing out contracts without putting
them out to tender because time is tight.

"This is all just a chance for the big construction firms to
get their hands in the till," said Christopher Gaffney, a
visiting professor at the graduate school of architecture and
urban planning at Fluminense Federal University in Rio.

"Society is not going to benefit in any way."

Organizers dismiss those concerns, Rebelo saying that a
report by a government agency declaring that four of the 12
stadiums are likely to be white elephants "wasn't worth
commenting on".

The delays mean the stadiums will not all be ready for the
Confederations Cup, the tournament held as a curtain raiser in
2013. But they should be ready for the main event a year later,
even if it means going well over budget.

Dec 9 American Airlines Group Inc said
higher average fares per mile have boosted its revenue and
profit expectations for the fourth quarter, a day after rival
United Continental Holdings Inc also raised forecasts.

WASHINGTON, Dec 9 U.S. wholesale inventories
fell as previously reported in October amid a surge in sales,
supporting views that inventory investment would provide a
modest boost to economic growth in the fourth quarter.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: